January homes sales sputter

Thursday

Feb 21, 2013 at 11:51 AMFeb 21, 2013 at 5:46 PM

A tight inventory pushes prices higher as signs point to a seller's market.

By JOSH SALMAN

Home sales across Southwest Florida sputtered at the start of the busy buying season, with tight inventory keeping a lid on new purchases and pushing prices higher, indicators that all favor a seller’s market.

Realtors in Sarasota, Manatee and Charlotte counties sold 901 existing single-family homes in January, a 19 percent decline from December, when sales were somewhat inflated by an expiring tax break on forgiven mortgage debt.

Despite the less-than-stellar start to the year, the region’s sales still represented a 14 percent increase from January 2012, while median prices also showed significant gains, data released Thursday by the area’s three Realtor associations showed.

The combination of higher prices, sustained demand and anemic inventory has sparked bidding wars among buyers, who are now competing with a series of institutional investors and cash-heavy home flippers.

That dynamic — which industry watchers never saw coming just a year ago — has built a market that eerily echoes the most recent housing boom.

“Buyers are coming from out of town, doing a little research, and the properties they find are gone before they get here,” said Michael Moulton, a broker with Michael Saunders & Co. on Longboat Key. “That creates some urgency. The choices are getting narrow.”

January is considered a vital month because it comes at the onset of high season and sets the tone for the year in housing. In 2013, most agents agree inventory will be the primary indicator driving the market.

So far, the New Year has not brought much relief.

Last month, the available supply of homes in Sarasota rose to 5.4 months at the current sales pace — or the amount of time it would take to deplete the inventory if no new homes were added to the market. That is up from the 3.9 month-supply at the close of 2012.

But the increase was fanned mostly by the decline in sales, with the market only gaining 189 new listings in January. The current stock of 3,846 single-family homes in Sarasota last month represents about 1,000 fewer properties than during January 2012 and was flirting with the lowest mark in a decade, records show.

The balance between a buyer and seller’s market historically hangs around six months’ worth, which is also the figure that developers like to see before building speculation homes.

The prolonged shortage has lifted the median sale prices for single-family homes in Sarasota to $183,800. Although that is slightly lower than in December figure, houses Sarasota have now appreciated $21,800 over the year, new Realtor data show.

Those annual gains were mirrored in both Manatee and Charlotte counties.

Realtors say the market has climbed to a point where any property that is priced right attracts multiple offers within a matter of days, sometimes even hours.

“Some of the more desirable properties are becoming very difficult to find,” said Gary Jackson, an economist at Florida Gulf Coast University. “But as prices continue to improve, more people will soon be able to sell.”

Ed Martinez, a Realtor with Keller Williams on the Water in Sarasota, lined up a showing with a buyer for 5:30 p.m. Wednesday. The property, a traditional for-sale-by-owner, had only been on the market one day.

But by the time Martinez met his clients at the Sarasota home, the owner had already accepted another offer for the full asking price: $346,000.

Martinez said the current dynamics are running dangerously close to the ballooning market that ultimately came crashing down on Southwest Florida six years ago — when a buyer would shove a for-sale sign in their yard after breakfast and be fielding offers by lunch.

“My buyers were just crushed at that point,” Martinez said. “That’s the premise of what’s going on in the market right now.”

Martinez said the shortage of traditional inventory is largely a result of underwater borrowers who bought during the worst of the housing crisis and still cannot recoup enough on their homes to move. A new home construction industry that nearly vanished during the downturn has also been slow to catch up.

Some analysts point to an uptick in new foreclosures now lurking in the court system as a source for new listings. But most of those distressed properties are sold directly to consumers through online auctions.

All this comes on the heels of a year when real estate transactions in the region rose 19 percent to reach the fourth highest level on record, outperformed only by the boom years of 2003, 2004 and 2005.

The biggest absorption of the inventory has come from northerners who finally have the wherewithal to sell a home in areas like Minnesota or Ohio and retire in Florida. About 60 percent of buyers in Southwest Florida during January paid cash, records show.

“We were going through this long down cycle, but it has really started to pick up in the last 12 months,” said Mark Wilson, owner of the Southwest Florida builder London Bay Homes. “Because people put off their buying decision for six years and sat on the sideline, there’s an awful lot of pent-up demand.”

But conditions that the industry would have begged for three years ago could now actually become a deterrent.

Realtors fear the shortage will begin to slow existing sales in coming months — the peak of the industry’s spring season — by driving buyers to other areas of Florida. The January dip has already begun to prove that theory to some degree.

The surging interest from institutional investors now snapping up distressed properties for use as rentals — outbidding other buyers in their way — only adds to the challenge, said Jack McCabe, a Deerfield Beach-based real estate consultant who correctly predicted the housing downturn.

“We may be seeing the first signs of some possible market manipulation because there’s just nothing else that makes sense for these price increases,” McCabe said. “It’s almost like the fever is coming back again.”

Statewide, the 13,679 homes that sold during January represented a 24 percent decline from the previous month.

That still outpaced January 2012 by 12 percent, data released Thursday by Florida Realtors showed.

Across the country, existing-home sales grew modestly from December to a seasonally adjusted annual rate of 4.92 million units in January, which was 9 percent above the pace in January 2012, according to the National Association of Realtors.

The national median home price for all housing types was $173,600 in January, up 12 percent from the same time last year. That was the steepest price gain since November 2005 and the 11th consecutive month of year-over-year appreciation.

“What we have is a situation of too many buyers and not enough inventory,” NAR spokesman Walter Molony said.

“In Florida, in particular, we’re transitioning into a seller’s market, and we don’t want to stay there too long or we will have affordability problems like we saw in the boom. I think we will see an increase in new listing this spring.